Currency Trading also known as ForEx Trading is an investment tool that is used for trading currencies. Back in the day, when the concept of currency did not exist, traders used to follow a barter system. However, with time as international boundaries were formed, countries started coming up with their unique currencies in the form of gold and other exportable goods. The evolution of financial markets finally led to formal currencies like the rupee, yen, dollar, and yuan, which also defined the economic stability of a nation.
Currencies, as we know them today, are used as a trading tool. In simple words, currency trading can be explained as the buying and selling of currencies. This buying and selling happen in pairs. Two currencies are clubbed together and then traded at a future date with a fixed rate, with the help of a broker. This future contract is also known as currency derivatives.
Currency Trading is a great way to mitigate foreign exchange risk. However, one must note that unlike other types of trading (commodity, equity, stocks, etc.), currency trading operates via banks, organisations, and individuals. There is no physical market or dedicated exchange to carry out currency trading. For this reason, the forex market can function 24 hours a day around the globe, with no time restrictions.
Currency Trading in India was once only limited to the rupee forward market that was dependent on interbank markets. But since the introduction of currency futures trading in India on stock exchanges like the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE), the concept has gained popularity among many small investors too.
Open a Demat & Trading Account
Why invest with Religare Broking?
Currency Trading Online can be a tricky activity that requires the knowledge and expertise of a broker. Religare Broking offers investors the much-needed support and practical assistance to trade on currencies online and reap maximum profits. With 26 years of experience in the industry, we help individuals trade on NSE in futures, options contracts of USD/INR, and protect investors from losses caused due to currency movements.
Religare Broking offers ground-breaking research to help investors make better currency trading decisions. The years of experience in studying markets ensures a smooth trading experience for all our clients. In addition to this, our clients also have access to the following:
Detailed reports on different currencies to make informed choices.
Weekly newsletters, story picks of the day, and timely recommendations.
Tailor-made assistance to ensure every individual’s investment goals are met.
Professional expertise acquired by working with several investors over the years by evaluating on the ground investment trends.
Technical analysis reports and weekly calls with the research team to discuss the market and other global events affecting the market
Which currency pairs are listed?
Currency derivatives are available in fours pair in India. These are US Dollars (USD), Japanese Yen (JPY), Euro (EUR), and Great Britain Pound (GBP) against the Indian Rupee(INR). Investors can also trade on cross-currency futures & options contracts on USD/JPY, GBP/USD, and EUR/USD.
What are the benefits of currency trading?
Currency trading has many benefits for not only big organisations but also small and medium-sized investors. Here are some of its advantages that investors must know:
Currency trading offers investors high liquidity. The buying and selling of currencies are reasonably fast-paced and straightforward. Investors can always find suitable trades, especially if they are trading in sought after pairs like the EUR/USD.
Low transaction costs
The transaction costs involved in trading currency online are fairly low. These costs are usually included in the price. The only other cost that investors bear is the broker’s commission, which again is nominal and usually equivalent to just a small percentage of the transaction amount.
Investors can trade in currencies using leverage. This implies that an individual can trade with more money than what they own. For instance, a 5:1 leverage ratio lets one trade ₹5 for every ₹1 in their account. So, a person can trade ₹5,000 even if they own only ₹1,000 in their bank account.
Huge market with no manipulators
The currency market is massive and controlled by economies rather than companies. So, it is hard for a single trader to control the prices. There are also no middlemen in the market, so investors can trade with other investors directly.
Since the market works worldwide, there are no time restrictions on trading. If one part of the world sleeps, the other is awake. This gives investors an increased window to invest.